Friday, October 24, 2008

Adam Smith on What Kept Industry in Motion

“In Wealth of the Nations, Smith also confessed that the success of capitalism depended on the propagation of the myth of human equality, noting that the myth is a necessary “deception which arouses and keeps in continual motion the industry of mankind.”

Comment

“the success of capitalism depended on the propagation of the myth of human equality”

That is news to me.

I suspect Braintree has made it up, or to be charitable, mixed up. Tut, tut!

The evidence for my assertion (I do not mean to be gratuitously rude) is the rest of Braintree’s sentence, which he alleges is a quote from Wealth Of Nations:

“noting that the myth is a necessary “deception which arouses and keeps in continual motion the industry of mankind.”

I recognised this immediately as in fact a quotation from chapter IV of Moral Sentiments (TMS IV.1.9: p 183) and it has nothing at all to do with equality!

Smith outlines his theory of utility and beauty and notes how people are often more pleased with an object of beauty (widely conceived) than they are with its utility.

He gives examples of a room with chairs in it that are disarranged, and their owner, ‘angry with his servant’, puts them into the appropriate order, even though he could ‘have set himself down upon one of them’ where they were, instead of placing them neatly against the wall. From this Smith concludes that it is not the ‘conveniency’ that is important to this man but ‘their arrangements’, which bestows upon his chairs their ‘propriety and beauty’.

Likewise, a man with a watch that happens to run two minutes slow, so he ‘sells it for a couple guineas’ and ‘purchases another at fifty, which will not lose above a minute in a fortnight’. What interests the man with a watch is not its timekeeping per se (remember, time the 18th century was less of a burning issue than it has become today), but the ‘perfection of the machine which serves to attain it.’ Leading Smith to ask: ‘How many people ruin themselves by laying out money on trinkets of frivolous utility’ (TMS IV.1.6: p 180).

After the parable of the ‘poor man’s son, whom heaven in its anger has visited with ambition’ he concludes:

“And it is well that nature imposes upon us in this manner. It is this deception which rouses and keeps in continual motion the industry of mankind. It is this which first prompted them to cultivate the ground, to build houses, to found cities and commonwealths, and to invent and improve all the sciences and arts, which ennoble and embellish human life; which have entirely changed the whole face of the globe, have turned the rude forests of nature into agreeable and fertile plains, and made the trackless and barren ocean a new fund of subsistence, and the great high road of communication to the different nations of the earth. The earth by these labours of mankind has been obliged to redouble her natural fertility, and to maintain a greater multitude of inhabitants.” (TMS IV.1.10: p 181).

It is the pursuit of trinkets and frivolities that keeps inudstry in motion, not the myth of equality. 'Keeping up with the Joneses' is about competing to be better than others, not about equality.

Now, this has nothing to with Adam Smith preaching ‘equality’, an absurd suggestion with the contrary state of others, visible to him and all who stepped out of their houses and passed by the multitudes of people around them from all classes and levels of opulence and poverty (poor people in Edinburgh and Glasgow tended to walk a lot mroe than today).

Braintree claims that Adam Smith taught that “the success of capitalism depended on the propagation of the myth of human equality”. He didn’t.

And anyway ‘capitalism’ as a word and phenomenon were unknown to Adam Smith, who died in 1790 (the word being invested in 1854 by Thackeray, the novelist, in his book, The Newcomes, and the phenomenon something that evolved in the 19th century.

Smith saw commerce and industry as generating employment for poor families and a means to spread opulence down to the poorer section of the community, which was the larger proportion of society. The rich became better off, but so did the poor who needed a share of opulence the most. His views were no myth, as anybody reading Moral Sentiments and Wealth Of Nations would realise.

I won’t bother going to examine Braintree’s assertions about Adam Smith’s views on ‘merit’ and ‘demerit’. His misrepresentations above are enough for one day.